This may seem an odd topic, but stick with me. Yesterday Disney’s ABC television network said it was licensing two canceled daytime TV soap operas to a production company that would be moving the shows to the Internet. I seem to be the only one who thinks this is a brilliant move. In fact it might be the Internet’s next killer app.

All My Children and One Life to Live as killer apps? Yes.

A killer app, remember, is the Silicon Valley term for an application that all by itself justifies to certain users the acquisition of hardware needed to run that app. People will go down to the store and buy hardware just to be able to use that application, whatever it is. VisiCalc was the killer app for the Apple ][, Lotus 1-2-3 was the killer app for the IBM PC, Halo was the xBox killer app, and Bonanza was the killer app for U.S. color TV.

Every new platform needs a killer app to get beyond the early adopters and reach a broader audience. Some experts are arguing that Netflix is the killer app for Internet TV, which might be right. But I think it might just as easily be All My Children.

ABC had nothing to lose in this deal. The two soaps in question were already canceled, winding down their casts and story lines. I’m sure they were acquired for a dollar each or less. If moving online saved ABC some costs from closing-down the series they may have actually paid Prospect Park to take the shows off its hands. So these iconic brands were cheap to acquire.

But they are expensive to produce, right?

Not so fast.

Nobody outside the shows and their networks knows for sure but a $50 million figure is often thrown out as the annual production cost of a major soap, so let’s work with that.

Fifty million dollars is $192,000 per episode or $4,370 per finished minute based on 44 minute shows. That’s a lot of money but a lot less than primetime TV budgets. It’s also the absolute most any soap has ever cost with most costing less. Certainly there are some savings to be found in there. Let’s claim a 20 percent labor savings from moving to the Internet, bringing per minute costs down to $3,496.

Actually, there are plenty of additional savings. Some savings will come from lower labor costs as actors accept smaller paychecks as an alternative to retirement or unemployment. But an even greater savings will come from any Internet soap’s ability to offer online every episode ever broadcast — the long tail — at an effective production cost of $0 per hour.

If a third of Internet viewers are watching old episodes that drops the effective cost of new episodes by a third, so we are down to $2,342 per finished minute.

Don’t forget potential subsidies from hardware companies. As a killer app for Internet-connected TVs, for example, All My Children might get some cash from TV manufacturers. Bonanza got money from RCA that way and many popular shows were moved to HD production with financial support from HDTV makers. Why not the same for Erica Kane?

Our All My Children budget is now down to $26.8 million per year, so let’s figure $4 million of that might come from Samsung or Panasonic or maybe even Google TV if any of those platforms can be somehow uniquely linked to the shows, possibly through additional or interactive content.

Heck, what if All My Children could be accessed solely through its Facebook page? How much would Mark Zuckerberg pay for that?

I don’t know what Zuckerberg would pay, but I do have one number to work with — the rumored production budgets at YouTube’s upcoming professional channels. According to Variety, YouTube will shortly bring some professional channels to its service with budgets of $1000-$3000 per finished minute.

Our straw man budget for All My Children, which now stands at $22.8 million per year, just happens to work out to $2000 per minute — right in the sweet spot of those rumored YouTube numbers.

I am not saying that All My Children and One Life to Live are headed to YouTube as the basis of a Soap Channel, but I am saying that they’d be profitable both for their producers and for YouTube if they were headed there.

Each show has about 2.5 million daily viewers — each a potential buyer of an Internet-connected TV. That’s $2.5 billion worth of TVs and well worth a $4 million production subsidy.

If YouTube or any of its competitive services could reliably get 2.5 million viewers per original episode they’d see that as well worth the money, too.

This is long form video with commercial breaks going to a dedicated audience which can now be global (that last part could be huge). Remember 2.5 million viewers of a 44-minute soap opera is the equivalent of 36 million typical three-minute YouTube video views. As professional content with a 40 year heritage that’s an easy sell to advertisers — a no-brainer for P&G.

So contrary to all the skepticism, moving soaps to the net could easily become a goldmine — one with a lifespan far longer than that of VisiCalc.

61 Comments

Rob
July 8, 2011 at 9:00 am

Interesting thoughts, as always, Bob.

I wonder however how many new viewers will pick up the soap habit when there are so many other great serials available on Netflix. I’ve found time in my life to view a few (read hundreds) episodes of All My Children but I very much doubt that I would have done so if they weren’t the only game in town like they were for much of my earlier life.

Good luck to them all as they try to make it work!

Joseph
July 10, 2011 at 9:06 pm

It’s not about Internet users picking up the soap habit.

It’s about soap viewers becoming Internet TV users.

My wife does not use computers or the Internet, but she is devastated that “her soaps” have been canceled and she would be the first in line to buy an Internet television device that will let her continue to watch her shows. She has several friends who will be in line with her.

Jeff J
July 8, 2011 at 9:27 am

There is already a book about this:
Byte Sized Television; Creating Your Own TV Series for the Internet by Ross Brown.
Bob, I’d put the link to Amazon, but I’ll let you do it in case you have some sort of advertising deal with them….

I’m in the UCLA Professional Program in Screenwriting. They don’t offer a class for this yet, but maybe someday. But everyone there still wants to win Oscars and Emmys. Still, this is the way it’s going, as you’ve said many times.

By the end of the column, you’ve blindly cut the budget in half and declared success.

Since this is a show for the Internet, there is an easier way to figure out what the possible production costs would be: Look at the New Media clauses in all of the union contracts. Unless they intend to dump the SAG, AFTRA, WGA, DGA, etc talent, those clauses in the agreements would kick in with new — and very reduced — pay levels.

Oh, you mean “cancelled”? I believe it is the case that both are correct, my persnickety friend, at least as variants among the US (canceled), the UK (cancelled) and Canada (again, cancelled).

MAtt
July 13, 2011 at 5:24 am

Bob is in California, where the correct spelling is c-a-n-c-e-l-e-d. We also don’t spell “curb” or “center” correctly. It’s like we are in a different country or something!

Jill
July 21, 2011 at 11:32 pm

I am also in California, where “travelled,” “cancelled,” and the like are also accepted alternate spellings. Check your dictionary.

Ralph Little
August 8, 2011 at 12:16 pm

Interesting that you mention the word curb.

In the UK, kerb and curb are both used for entirely different uses.
Curb is a verb to mean restrict, kerb a noun meaning the edge of the sidewalk, er I mean path

Cancelled
July 8, 2011 at 11:24 pm

Wrong! “Cancelled” is the proper English spelling “Canceled” is the bastardised american version. The pilgrims had poor English language skills.

Myles Standish
July 9, 2011 at 6:17 am

I don’t have any sources to back it up, but I’ve always been taught that modern American English is merely a less evolved version of the English everyone was speaking back in the 1600s. Therefore, the pilgrims and their descendants aren’t poor linguists, just slow to change.

Ronc
July 9, 2011 at 1:46 pm

Language rules that make sense are prefer(r)ed when alternatives exist. Adding “ed” to the present tense to create the past tense is just simpler. But for emphasis “cancellllled” might be preferrrrred.

Brad
July 11, 2011 at 7:15 am

The rule I was always taught is that when the emphasis is on the last syllable of the word the consonant is doubled. That is why it should be ‘canceled’

Ronc
July 11, 2011 at 1:20 pm

So we agree on the spelling but for different reasons. I’ll have to pay more attention in the future to see examples of your rule in action when the emphasis is on the last syllable.

Veetle IS well suited to serial content, but where do you begin? Run 100 channels in parallel? Veetle is great but I think it is best suited for live video.

Rocky
July 8, 2011 at 11:09 am

To tell you the truth, I think those cancelled soaps would translate well back to network radio, where they first started anyway. Could, I suppose, revive network radio drama (Or podcasts), since people people could follow them while at work, traveling, etc. Podcasts were/are one of the killer apps for iPod/mp3 players.

Wouldn’t that be like the Samurai renouncing firearms int he 17th century – something that works in Japan but not in Peoria?

Ken K
July 8, 2011 at 12:30 pm

Let’s not forget the fact that the content could move into territory not readily allowable on daytime braodcast TV. It could be a lot more risque and the use of more daring storylines would draw even more viewers. (Just look at the popularity of Spanish-language soaps for proof of this.)

John
July 8, 2011 at 12:32 pm

There are several reruns of past shows I’d like to see again. I find it silly more has not been made available on the Internet. Surely pinning a few ads to an episode would make the venture profitable and whoever owns the content will make more money than they are right now, which is zero.

Here is a fun idea for new produced Internet shows: Put all the finished shows on the server. Allow the viewers to download several shows in advance. The shows would be locked up to the release date, then it can be viewed. In a single download, one could get a week or two of All My Children and like a true soap fan, watch a new episode each day.

Mr Windows
July 8, 2011 at 1:19 pm

They want to shut down the PSTN due to lack of interest, and it’s long been the plan to shut down terrestrial TV. The Internet is where it will all be, sooner rather than later.

A Different Scott
July 8, 2011 at 5:59 pm

Be careful if you start dabbling in soap operas – they’re highly addictive….

swschrad
July 8, 2011 at 6:47 pm

@Mr. Windows: the phone companies are planning for transition off PSTN and to VoIP, bet on it. ATT is basically begging the FCC to force them into it.

you didn’t hear it from me, but several rows of dead ESS5 cabinets, with half of one lit, is a sobering thought. and that’s a small central office.

don’t trip over the fiber lines on your way out, though. the damage could be incalculable.

Thinking
July 9, 2011 at 4:40 am

Yea, PSTN is history. I wonder how they are going to use all that old copper?

Larry in Jax
July 11, 2011 at 3:58 am

PSTN dead??? I think not! Maybe for all you city boys but to those who live outside the city limits, and there are millions and millions who do even in the eastern US, even getting DSL can be difficult. Cable? No, usually not available either. Satellite? Not with the latency, reception issues when it rains, and have you seen the prices? Ouch! Cellular? You might be surprised where it isn’t available as well.

I manage IT for an agricultural company five with research facilities located in rural areas and getting any sort of internet access can be an issue. Often DSL using PSTN is the only service available and that is at the slowest mbps rates. Don’t throw away the PSTN networks until you find a way to reach all those people living outside the urban areas with access to broadband services!

Neilo
July 11, 2011 at 4:28 am

No PSTN is dead, but we haven’t had the funeral yet. Just as PSTN is a public service, a commodity once the service is replaced by fiber to the home as standard the fiber simply becomes a pipe with providers pushing bits into one end and peripherals such as phone towers, wifi etc. hanging of the network. The only question is when will this happen – I don’t know the answer, but as the Cringe has pointed out TV soaps may just be the killer app.

What happens to the copper – you simply melt it down and turn it into more circuit boards be they mobile phones, internet TVs or computers!

Ronc
July 11, 2011 at 1:33 pm

Verizon famously installed FIOS and then said no more. I expect copper to be around a long time because it’s already there and can be used to deliver the Internet via DSL or T1 using repeaters. But the “death” of PSTN may happen if you limit the definition of “death” to replacing the circuit switches with routers.

JohnK
July 8, 2011 at 11:19 pm

I’ll play devil’s advocate and say these won’t be that attractive to viewers. There is more to a TV program than content. There is value in that it is being aired on TV. Kind of the difference of playing your own music or having a DJ select tunes. Also, there is a certain tyranny in programs being aired at a given time. You have to sit down and watch them at that moment. Yes you can time shift with various gadgets. Yes you can watch DVD versions. I think the first airing on TV is a kind of anchor that supports the other viewing habits. In addition, many people watching at the same time makes it a social event, something you can discus with your friends later. Hard to talk about if you are all watching different episodes at different times. So, not a show stopper, but not having a set schedule on TV will cut the prospective audience.

These soaps could be the killer app for online video sure, but they could really be killer apps for Social TV. Let the audiences watch the shows linearly and have the option to comment throughout. They’ll love the community it fosters and the advertising opportunities will be amazing!

$4,370 per finished minute. Sheesh for some people these days thats half a years salary. Anyway are kids actually going to watch this stuff? Or are they trying to get oldsters to buy more tech stuff?

Scott Watkins
July 17, 2011 at 10:48 am

Steve, I work on a web series in Canada, and we’re producing on ~$350 per finished minute. ~$4500 would be swimming in gravy comparatively.

I would love for the soaps to go on line, as I think the rising tide would float a lot of boats. What would be great would be if the producers were to eventually start bringing new soaps on as well, along with other drama types that would fit their assembly line production model, which has remained conceptually the same since the Republic movie serials. I think it would be a great way to bring costs down, and once you had a cash cow like the soaps it would make a lot more work possible, and maybe make the idea of producing web content a legitimate investment.

And then maybe this could be a living for me.

John Walters
July 10, 2011 at 6:06 pm

Interesting. Here’s a quote from Manny Anekal, Zynga’s Director of Brand Advertising: “More women are playing Farmville than watching soap operas”. I think these long-playing soaps are getting cancelled *because* of what else is available on the internet. OK, perhaps a move to the internet might be a good gamble, but more likely a desperate move, but we’ll see.

Way back when we were all idealistic about this internet thing, the concept of “dis-intermediation” was a big thing – in other words, that the ability to pretty much eliminate physical distance for some transactions would remove a bunch of useless parasites from the supply chain.

What really bugs me about TV is that the content generally sucks because of the business model (eg: the design of ‘Lost’ as a vehicle to work advertising).

Access to content that doesn’t suck is also restricted because of the business model (eg: I live in Australia, access to something like “The Wire” is generally slowed by negotiation/elapse of rights for the local distributors).

I live in hope that a more direct model will result in both higher quality content and a financial reward for those willing to do something innovative (ie: most of the really good sci-fi stuff is already cancelled before it airs here – I never even get a chance to vote with my wallet for good content).

Ronc
July 12, 2011 at 1:46 pm

Quality is in the eye of the beholder. “Lost” is not my cup of tea but “CSI” and many other plausible problem-solving dramas are.

While many TV shows benefit from “reruns” (having access to previous episodes) – and there’s clearly a demand for that – does it extend generally over all genre’s? And specifically does it apply to Soaps?

I mean, things like M*A*S*H, Friends, Star Trek and so on are all wildly popular, even today. And there’s a lot of nostalgia, or just entertainment, in watching those shows again. But these shows are “done”. ie there’s no new episodes.

For a “current” product, where you start watching in season 2 or 3, then being able to go back to the “back-story” is great. But it’s not common to start watching something in say season 8, and hence grabbing all previous 7 seasons. Of course ti happens – but not by the “millions of viewers”.

Soaps are in another category altogether. They’ve got a zillion seasons already done (how far back do you want to start?) and there’s ongoing new material coming out literally every day.

So I question the suggestion that one third of viewers will be viewing old material. (Let’s define “old” as more than 2 months old). Letting people watch at their own pace is great, but it doesn’t really improve “viewer numbers” it just means that a “viewer” has more chance of seeing “everything”.

But that’s purely a budget argument. Does it matter? Well it depends ultimately on the revenue that the new production company get per episode. Can they make the books balance? The question is not so much the details of how much an episode costs, but whether revenue > cost. Sure you may get it down to Googleish cost rates – but Google is prepared to lose hundreds of millions to kick-start IPTV. Does the new production company have those sorts of pockets?

Your site lately takes forever to load, it waits for all sorts of things: collective.media, chartbeat, tags, etc. These “services” are a royal pain…

Ronc
July 13, 2011 at 1:24 pm

I’ve noticed the slow loading also.

sport
July 13, 2011 at 11:47 am

The real market for these babies are the salons and the nail parlors (as several news organizations have reported) – they are the ones dying for replacement programming for their customers now that Oprah and the soaps have gone off the air – I thought she could make a bundle by scarfing them up and using them to help launch her new network – but these female oriented markets also can buy off the internet if that is where the programming is – the ladies just want to be entertained and talk while they get their services.

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